TY - JOUR
AU - Estevadeordal,Antoni
AU - Taylor,Alan M.
TI - A Century of Missing Trade?
JF - National Bureau of Economic Research Working Paper Series
VL - No. 8301
PY - 2001
Y2 - May 2001
DO - 10.3386/w8301
UR - http://www.nber.org/papers/w8301
L1 - http://www.nber.org/papers/w8301.pdf
N1 - Author contact info:
Antoni Estevadeordal
Integration and Trade Sector
Inter-American Development Bank
1300 New York Avenue, N.W.
Washington, D.C. 20577
E-Mail: ANTONIE@IADB.ORG
Alan M. Taylor
Department of Economics and
Graduate School of Management
University of California
One Shields Ave
Davis, CA 95616-8578
Tel: (530) 752-0741
Fax: (530) 752-9382
E-Mail: amtaylor@ucdavis.edu
AB - In contemporary data, the measured factor content of trade is far smaller than its predicted magnitude in the pure Heckscher-Ohlin-Vanek framework, the so-called 'missing trade' mystery. We wonder if this problem has been there from the beginning: that is, we ask if the Heckscher-Ohlin theory was so much at odds with reality at its time of conception. We apply contemporary tests to historical data, focusing on the major trading zone that inspired the factor abundance theory, the Old and New Worlds of the pre-1914 'Greater Atlantic' economy. This places our analysis in a very different context than contemporary studies: an era with lower trade barriers, higher transport costs, a more skewed global distribution of the relevant factors (especially land), and comparably large productivity divergence. These conditions might seem more favorable to the theory, but the results are still very poor.
ER -